Truth in Lending: 19(f)(4)(ii) Timing.
1. Requirement. Section 1026.19(f)(4)(ii) provides that the settlement agent shall provide the disclosures required under § 1026.19(f)(4)(i) no later than the day of consummation.
1. Requirement. Section 1026.19(f)(4)(ii) provides that the settlement agent shall provide the disclosures required under § 1026.19(f)(4)(i) no later than the day of consummation.
1. Reproduction. The special information booklet may be reproduced in any form, provided that no changes are made, except as otherwise provided under § 1026.19(g)(2). See also comment 19(g)(2)-3. Provision of the special information booklet as a part of a larger document does not satisfy the requirements of § 1026.19(g). Any color, size and quality of paper, type of print, and method of reproduction may be used so long as the booklet is clearly legible.
[65 Fed. Reg. 17,132 (Mar. 31, 2000); 66 Fed. Reg. 17,340 (Mar. 30, 2001); 69 Fed. Reg. 16,769 (Mar. 31, 2004); 72 Fed. Reg. 63,476 (Nov. 9, 2007); 72 Fed. Reg. 71,059 (Dec. 14, 2007); 73 Fed. Reg. 44,607 (July 30, 2008); 74 Fed. Reg. 23,302 (May 19, 2009); 76 Fed. Reg. 79,772 (Dec. 22, 2011); 78 Fed. Reg. 11,017 (Feb. 14, 2013); 78 Fed. Reg. 79,730 (Dec. 31, 2013); 80 Fed. Reg. 8767 (Feb. 19, 2015); 80 Fed. Reg. 43,911 (July 24, 2015); 82 Fed. Reg. 37,656 (Aug. 11, 2017); 83 Fed. Reg. 19,159 (May 2, 2018)]
[74 Fed. Reg. 5244 (Jan. 29, 2009); 74 Fed. Reg. 41,248 (Aug. 14, 2009); 75 Fed. Reg. 7848 (Feb. 22, 2010); 75 Fed. Reg. 7925 (Feb. 22, 2010); 76 Fed. Reg. 18,363 (Apr. 4, 2011); 76 Fed. Reg. 35,723 (June 20, 2011); 76 Fed. Reg. 79,772 (Dec. 22, 2011); 77 Fed. Reg. 69,736 (Nov. 21, 2012); 78 Fed. Reg. 70,196 (Nov. 25, 2013); 78 Fed. Reg. 70,196 (Nov. 25, 2013); 78 Fed. Reg. 79,730 (Dec. 31, 2013); 79 Fed. Reg. 56,483 (Sept. 22, 2014); 80 Fed. Reg. 73,947 (Nov. 27, 2015); 81 Fed. Reg. 84,369 (Nov. 22, 2016); 81 Fed. Reg. 86,260 (Nov. 30, 2016); 82 Fed. Reg. 18,975 (Apr. 25, 2017); 82 Fed.
1. Charges in comparable cash transactions. Charges imposed uniformly in cash and credit transactions are not finance charges. In determining whether an item is a finance charge, the creditor should compare the credit transaction in question with a similar cash transaction. A creditor financing the sale of property or services may compare charges with those payable in a similar cash transaction by the seller of the property or service.
i. For example, the following items are not finance charges:
1. Choosing the provider of a required service. An example of a third-party charge included in the finance charge is the cost of required mortgage insurance, even if the consumer is allowed to choose the insurer.
2. Annuities associated with reverse mortgages. Some creditors offer annuities in connection with a reverse-mortgage transaction. The amount of the premium is a finance charge if the creditor requires the purchase of the annuity incident to the credit. Examples include the following:
1. General. This rule applies to charges by a third party serving as the closing agent for the particular loan. An example of a closing agent charge included in the finance charge is a courier fee where the creditor requires the use of a courier.
1. General. A fee charged by a mortgage broker is excluded from the finance charge if it is the type of fee that is also excluded when charged by the creditor. For example, to exclude an application fee from the finance charge under § 1026.4(c)(1), a mortgage broker must charge the fee to all applicants for credit, whether or not credit is extended.
2. Coverage. This rule applies to charges paid by consumers to a mortgage broker in connection with a consumer credit transaction secured by real property or a dwelling.
1. Relationship to other provisions. Charges or fees shown as examples of finance charges in § 1026.4(b) may be excludable under § 1026.4(c), (d), or (e). For example:
i. Premiums for credit life insurance, shown as an example of a finance charge under § 1026.4(b)(7), may be excluded if the requirements of § 1026.4(d)(1) are met.
ii. Appraisal fees mentioned in § 1026.4(b)(4) are excluded for real property or residential mortgage transactions under § 1026.4(c)(7).
Paragraph 4(c)(1)
1. Real estate or residential mortgage transaction charges. The list of charges in § 1026.4(c)(7) applies both to residential mortgage transactions (which may include, for example, the purchase of a mobile home) and to other transactions secured by real estate. The fees are excluded from the finance charge even if the services for which the fees are imposed are performed by the creditor’s employees rather than by a third party. In addition, the cost of verifying or confirming information connected to the item is also excluded.
1. General. Section 1026.4(d) permits insurance premiums and charges and debt cancellation and debt suspension charges to be excluded from the finance charge. The required disclosures must be made in writing, except as provided in § 1026.4(d)(4). The rules on location of insurance and debt cancellation and debt suspension disclosures for closed-end transactions are in § 1026.17(a). For purposes of § 1026.4(d), all references to insurance also include debt cancellation and debt suspension coverage unless the context indicates otherwise.
1. General. Fees charged for the specialized form of debt cancellation agreement known as guaranteed automobile protection (“GAP”) agreements must be disclosed according to § 1026.4(d)(3) rather than according to § 1026.4(d)(2) for property insurance.
1. Affirmative request. A creditor would not satisfy the requirement to obtain a consumer’s affirmative request if the “request” was a response to a script that uses leading questions or negative consent. A question asking whether the consumer wishes to enroll in the credit insurance or debt cancellation or suspension plan and seeking a yes-or-no response (such as “Do you want to enroll in this optional debt cancellation plan?”) would not be considered leading.
1. Earnings on deposits or investments. The rule that the creditor shall not deduct any earnings by the consumer on deposits or investments applies whether or not the creditor has a security interest in the property.
[67 Fed. Reg. 16,982 (Apr. 9, 2002); 74 Fed. Reg. 5244 (Jan. 29, 2009); 75 Fed. Reg. 7848 (Feb. 22, 2010); 75 Fed. Reg. 7925 (Feb. 22, 2010); 76 Fed. Reg. 79,772 (Dec. 22, 2011); 81 Fed. Reg. 84,369 (Nov. 22, 2016); 82 Fed. Reg. 18,975 (Apr. 25, 2017); 83 Fed. Reg. 6364 (Feb. 13, 2018)]
1. Clear and conspicuous standard. The “clear and conspicuous” standard generally requires that disclosures be in a reasonably understandable form.
1. When disclosures must be more conspicuous. For home-equity plans subject to § 1026.40, the terms finance charge and annual percentage rate, when required to be used with a number, must be disclosed more conspicuously than other required disclosures, except in the cases provided in § 1026.5(a)(2)(ii). At the creditor’s option, finance charge and annual percentage rate may also be disclosed more conspicuously than the other required disclosures even when the regulation does not so require.
1. Disclosure before the first transaction. When disclosures must be furnished “before the first transaction,” account-opening disclosures must be delivered before the consumer becomes obligated on the plan. Examples include:
1. Disclosing charges before the fee is imposed. Creditors may disclose charges imposed as part of an open-end (not home-secured) plan orally or in writing at any time before a consumer agrees to pay the fee or becomes obligated for the charge, unless the charge is specified under § 1026.6(b)(2).
1. Return policies. In order for creditors to provide disclosures in accordance with the timing requirements of this paragraph, consumers must be permitted to return merchandise purchased at the time the plan was established without paying mailing or return-shipment costs. Creditors may impose costs to return subsequent purchases of merchandise under the plan, or to return merchandise purchased by other means such as a credit card issued by another creditor.
1. Membership fees. See § 1026.60(b)(2) and related commentary for guidance on fees for issuance or availability of a credit or charge card.